Late last year, Warren Buffett's holding company, Berkshire Hathaway, started buying up shares of a mysterious company. No one knew the company in question because Berkshire had requested an exemption from the SEC that allowed it to skirt disclosure rules. But in early 2024, the mystery stock was revealed as Chubb (NYSE: CB).

Here's the strange part: Chubb runs a business model very similar to Berkshire's. It was strange that Buffett would opt to buy shares of a close competitor instead of simply repurchasing Berkshire stock directly. Might Buffett believe that Chubb could become the next Berkshire -- signaling a huge growth runway ahead?

The companies have a lot in common

Over the decades, Buffett has turned Berkshire into a behemoth organization now valued at nearly $1 trillion. While his exact tactics have varied over the years, the overarching strategy has remained consistent. At the core of Berkshire's operations sits a litany of insurance businesses. These companies produce investable cash flow whenever they write policy premiums. And because this money doesn't need to be paid out until a claim is filed, Berkshire essentially can invest this cash in the meantime free of interest. Berkshire now has holdings in dozens of companies spanning nearly every industry.

In many ways, Chubb is a miniature Berkshire. At its core also sits a portfolio of insurance companies that provide everything from property and casualty insurance to personal accident and supplemental health insurance. The firm even operates in the reinsurance market -- essentially providing insurance policies to insurers themselves. And like Berkshire, Chubb invests its "float" -- the term for the excess cash that insurance operators generate -- in securities that earn it a return on top of any underwriting profit it may also accrue.

Berkshire and Chubb not only have similar business models, but also similar long-term track records. Over the past decade, the total returns for each stock have been nearly identical. However, there are two major differences to be aware of here. One suggests Chubb could very well be the next Berkshire, although the other creates a level of caution.

Two reasons Chubb remains different from Berkshire

The biggest difference between Chubb and Berkshire is obviously size. After all, this is what makes it possible for Chubb to become the next Berkshire. Right now, Berkshire's market cap is around $1 trillion, yet Chubb's is only around $115 billion. If Chubb became the next Berkshire, it would signal roughly 900% in potential long-term upside.